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McKinsey Global Survey results What marketers say about working online Marketers agree that digital tools and technologies are valuable, though many of their companies struggle to measure the financial impact and capture customer data. Digital media and online tools remain a largely untapped resource for companies, according to a recent survey of marketing executives.1 Most respondents agree that their online presence is important and that digital tools provide their companies with a major opportunity, but few are taking the structural steps required to benefit from selling online or engaging consumers through new technologies such as social media. Indeed, most respondents indicate that companies are still trying to figure out how digital media can meaningfully improve their bottom lines. The survey asked marketing executives from around the world about the digital tools and channels their companies use and expect to use, the challenges they face and actions they have taken in response, and the metrics available to assess performance online.1 The online survey was in the field from October 11 to October 21, The most pressing competitive challenge marketing executives identify is producing and 2011, and garnered responses using customer insights, and respondents hope to use data to drive sales and customer from 792 marketing executives representing the full range engagement. But they also say their companies often have only basic customer information— of industries, regions, titles, and despite the tremendous increase in data available to them in recent years—and they report company sizes. The data are weighted by the contribution of difficulties in measuring the impact of online tools and channels. Respondents also say they each respondent’s nation to lack the internal leadership and resources to develop better analytical capabilities and, global GDP to adjust for differ- ences in response rates. as a result, better information and insights about customers. Jean-François Martin

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2 McKinsey Global Survey results What marketers say about working online Survey 2011 Digital marketing Exhibit 1 of 6 Exhibit title: Interacting with current customers Exhibit 1 Interacting with current customers % of respondents,1 n = 777 Digital-related marketing changes with biggest impact on respondents’ companies in the past 2 years Ability to interact and/or serve Greater use of analytical tools and 56 24 customers in a new manner models in decision making Increasing access to data Emergence of new business models 39 24 and insights and new revenue streams Greater ability to increase Ability to reach new customer 30 productivity in various business 17 segments processes through technology Greater ability to reduce costs Change in balance of power in various business processes 25 within historically established 15 through technology value chains Increasing pace of change in 25 Entry of new competitors 14 the marketplace 1 Respondents who answered “other” or “don’t know/not applicable” are not shown. The state of play online Marketing executives overwhelmingly agree that an effective online presence is very or extremely important for staying competitive—81 percent of them say so. And more than half of respondents say that over the past two years, the increasing prevalence of digital media and tools has changed their companies’ ability to interact with and serve new customers (Exhibit 1). Notably, about half as many cite either the ability to reach new customer segments or the emergence of new business models as one of the greatest effects of digital media’s pervasiveness. Overall, these tools seem to be creating little competitive differentiation. Just over half of respondents, for example, say their companies and competitors earn about the same share of revenue from online sales, with almost equal numbers of other respondents estimating shares above and below.2 2 Fifteen percent cite revenue Strong majorities of executives say that to connect with consumers today, their companies higher than competitors, most often use two digital channels: their company home pages and e-mail. Looking and 17 percent lower; another 16 percent don’t know. ahead, however, there’s a clear shift in what respondents believe their companies should be

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3 McKinsey Global Survey results What marketers say about working online Survey 2011 Digital marketing Exhibit 2 of 6 Exhibit title: Home page today, mobile apps tomorrow Exhibit 2 Home page today, mobile apps tomorrow % of respondents,1 n = 777, by time frame Today Next 2–4 years Digital tools that respondents’ marketing departments use, and should use, most often to reach customers 78 Mobile/SMS 13 Company home page 28 communication 22 E-mail communication 60 Company online store 12 24 19 39 11 Social media sites 47 Mobile applications 48 20 Interactive voice 5 Natural search 17 recording (IVR) 7 Paid search words 18 Third-party online store 5 17 8 17 Paid banner ads 9 1 Respondents who answered “other” or “don’t know” are not shown. using in two to four years (Exhibit 2): a broader range of tools, especially mobile applications and social media platforms such as Twitter and Facebook, while far fewer respondents say their companies should use their home pages and e-mail most often to communicate in the future. Though less than a majority say their companies use social media most often today, responses show that most are experimenting: nearly three-quarters of respondents say their companies currently use social media to achieve business objectives in some way. One- quarter of these respondents say these platforms are important tools, and 46 percent say their companies use some social-media tools to complement other marketing efforts. Organizationally, a majority of executives (54 percent) say their companies have responded to the increasing prevalence of online tools and e-commerce by seeking to integrate them into existing business models. However, nearly one-third have established separate teams or departments to manage online opportunities. The finding that large shares are taking quite different approaches suggests that marketers are still struggling to figure out what will work best at their own companies. However, it’s notable that respondents also report few process problems (for example, insufficient coordination) between marketing and other departments that hurt their companies’ overall business. Only 18 percent, for example, report major problems in cross-functional task forces at their companies, while another 18 percent say the same about

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4 McKinsey Global Survey results What marketers say about working online strategy development—the highest share among all internal processes we asked about. Half say there are no cross-functional problems involving marketing in consumer communication. Marketers’ online challenges The most important digital-related challenge for marketers and business leaders—ranked first by the largest share of respondents—is generating and leveraging deep customer insights Survey 2011 (Exhibit 3). The good news is that more respondents say their companies either are taking or Digital marketing Exhibit 3 of 6 Exhibit title: Ranking challenges Exhibit 3 Ranking challenges Most important digital-related challenges for marketers and business leaders Ranking of top 3, where 1 = the most important Average ranking % of respondents (out of 3) ranking given challenge as most important, n = 752 Ability to generate and leverage deep customer insights 1.57 32 is becoming a necessity to compete effectively Managing brand health and reputation is harder when 1.90 22 social media plays an important role in marketing Service automation and efforts to migrate customer interactions create customer dissatisfaction and 1.95 3 destroy value Marketing and related departments face signiﬁcant talent 2.06 8 gap in analytical capabilities Increasing prevalence of digital tools and technologies 2.06 8 threatens existing business models Online price comparison tools impede companies’ ability to 2.07 3 set optimal prices Difﬁcult to assess effectiveness of digital marketing, since 2.08 11 online and traditional metrics aren’t comparable An overreliance on data and facts stiﬂes creativity and 2.19 3 breakthrough innovation Pervasiveness of marketing activities causes organizational challenges (eg, unclear accountability and incentives, 2.22 5 changes in decision-making processes) Too often, digital marketing efforts target only younger 2.25 3 customer segments

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5 McKinsey Global Survey results What marketers say about working online Survey 2011 Digital marketing Exhibit 4 of 6 Exhibit title: Active responses Exhibit 4 Active responses % of respondents Plans at respondents’ companies to address highest-ranked challenges Challenge already addressed Formal plan being Plan developed but not with formal plan implemented yet implemented Ability to generate and leverage deep customer insights is becoming a necessity to compete 14 33 14 effectively, n = 431 Managing brand health and reputation is harder when social media plays an important role in 19 24 14 marketing, n = 410 Service automation and efforts to migrate customer interactions create customer dissatisfaction and 22 12 19 destroy value, n = 79 plan to take action on some of the higher-ranked challenges compared with those they ranked lower (Exhibit 4). Notably, many companies seem to want to do it themselves: on many of these challenges, more respondents say the best approaches involve developing internal capabilities rather than relying on external resources. For example, of respondents who say managing brand health and reputation is an important challenge, 49 percent say creating content or services for customers on social-media sites and forums would help in addressing it, while just 14 percent cite the hiring of third-party service providers to manage online brand interactions. Though measuring the effect of online tools isn’t the most-cited problem, other responses indicate that many marketers continue to struggle with developing the right metrics and translating insights into actions that influence consumer behavior. Nearly one-third of

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6 McKinsey Global Survey results What marketers say about working online Survey 2011 Digital marketing Exhibit 5 of 6 Exhibit title: Struggling with online metrics Exhibit 5 Struggling with online metrics % of respondents,1 n = 777 Challenges with common online metrics There are too many metrics to choose They do not adequately quantify the 31 from, so it is difﬁcult to tell which ones 18 ﬁnancial impact on my business matter most It is difﬁcult to understand what these They are too “ﬂuffy” and not grounded 24 18 metrics actually measure in tangible data They do not measure the relevant They are not as detailed as we nonﬁnancial levers in my business 23 11 would prefer (eg, intent to purchase again) They are not as directly They are too different from traditional comparable with traditional metrics 23 9 metrics than we would prefer as we would prefer Turnaround time from execution to They are not as actionable as we 20 measuring results is too fast from what 3 would prefer we would prefer 1 Respondents who answered “other” or “don’t know” are not shown. respondents say existing digital metrics don’t quantify the financial impact of those tools or channels on the business (Exhibit 5), and of the executives whose companies are using social media, almost half say quantifying the impact adequately is difficult. In addition, there is little consensus about how price transparency affects annual revenues: 38 percent say the increased transparency associated with online tools and e-commerce has not reduced their companies’ revenues this year, 8 percent say it has, and 27 percent don’t know.3 Even 3 Small shares also cite reduc- looking solely at revenues from online sales, which should be straightforward to measure, tions in revenue from less than 18 percent of marketing executives say they don’t know what share those sales were of 1 percent (5 percent of respondents) to more than total revenues last year; another two-thirds say such sales accounted for 10 percent or less of 30 percent (1 percent their companies’ annual revenues. of respondents). 4 For example, see Georges Desvaux and Baudouin Regout, Finally, few respondents say their companies most frequently try to reach customers aged “Older, smarter, more value conscious: The French consumer 51 and older through online tools or channels. This is notable because other McKinsey transformation,” research has shown that older consumers are wealthier than younger ones and quite active mckinseyquarterly.com, June 2010. online.4 This likely indicates a growth area for many companies.

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7 McKinsey Global Survey results What marketers say about working online Marketers and big data Congruent with the importance respondents place on leveraging customer insights, 71 percent say data-driven customer insights will be very or extremely important to their companies’ competitiveness during the next two to four years—but just 4 percent say their companies now have the required analytical capabilities to manage their businesses more effectively (Exhibit 6). Marketers most frequently say they hope to improve sales or customer engagement 5 See David Court, Dave through analyzing data: 43 percent and 42 percent, respectively. (We know from other work Elzinga, Susan Mulder, and Ole Jørgen Vetvik, “The that companies hope to use technology to help consumers throughout their decision journey: consumer decision journey,” triggering the impulse to buy, raising awareness of brands to ensure they are considered for mckinseyquarterly.com, June 2009. Survey 2011 purchase, and providing information as consumers evaluate product options.5) Digital marketing Exhibit 6 of 6 Exhibit title: Resource constraints on analysis Exhibit 6 Resource constraints on analysis % of respondents,1 n = 777 Analytical challenges to managing business more effectively at respondents’ companies, next 2–4 years Difﬁculty ﬁnding analytically talented Constraints on funding 40 and business-experienced individuals 25 and resources within our company Lack of company interest in Lack of proper infrastructure 34 analytics or a will to change current 19 and IT tools analytical practices Difﬁculty attracting the Lack of quality data to analyze 27 appropriate candidates to ﬁll 16 positions at our company Inability of our HR department Lack of internal leadership 27 to identify the required skills in 10 on analytics potential candidates We already have the required Constraints on time 26 capabilities to manage our 4 business effectively 1 Respondents who answered “other” or “don’t know” are not shown.